What is Title Insurance and do I need it?
What is Title Insurance?
Title insurance protects home buyers and mortgage lenders against defects in title. Title is a document which shows legal ownership of a property. Title will show past ownership, past transfers, any liens or encumbrances on title. In a real estate transaction, a title search will more than likely be performed on the property. In most cases, before the real estate property can be transferred, the search must show a good clean title, free of defects which could affect ownership. There are two types of title insurance. A lender’s policy which protects the lender’s interest in the property and an owner’s policy which protects the homeowner’s interest in the property for as long as they have ownership.
Do I need Title Insurance?
Even if at the time the title search of the property was performed there appeared to be no defects, this does not mean the property is free and clear. There could be many issues which may not have been found which could date back to many years before you received ownership. For example, a long lost heir could claim ownership. There could be issues raised regarding forgery on an old transaction that your seller may not have even been a part of. There could even be old liens, ordinance violations or unpaid taxes which encumber the property. For most people, a home is one of their biggest assets. Title insurance protects your home and your interests. Title insurance is a one-time premium and not a monthly payment you make as with other insurances. Also, title insurance is good for the duration you own your home. This offers you protection from a claim which may have arisen years prior to you owning the property. Having to bear the burden of legal fees could costs thousands of dollars. Having a one-time premium for title insurance can give you peace of mind.
Title Insurance Costs?
Title insurance ranges by states. There are many factors which go into deciding how much title insurance will actually costs. One of the biggest factors is how much the house costs, as larger loan could mean a larger loan payout. As with any type of insurance, title insurance costs more depending on the cost of the property. Usually Seller’s attorney chooses the title company, however, you do have the right to shop around. Title insurance is a one-time payment which could save you thousands of dollars and protect your interests.